The banking group that has been leading the talks for a massive debt relief deal for Greece says investors owning €81 billion ($101 billion) in Greek bonds have so far agreed to participate.

The Institute of International Finance said on Wednesday that these investors own 39.3 per cent of the €206 billion in Greek debt in private hands. Bloomberg said its calculations showed that investors with 58 per cent of the Greek bonds eligible for the offer have indicated they will participate.

The 30 investors named by the IIF include 12 institutions that already signed up earlier this week.

A senior Greek finance ministry official told Reuters the government was now optimistic that well over 75 percent of eligible bonds would be submitted, easily clearing the original minimum threshold it had set for the deal to proceed.

In total, bank, insurers and pension funds holding bonds worth around €120 billion have already declared they will take part.

Athens, totally reliant on international support to stave off bankruptcy, has asked its private sector creditors to accept steep losses on their Greek bond holdings as it fights to cut a public debt burden of 160 per cent of gross domestic product.

They are being asked to give up almost three quarters of the value of their investments in return for new Greek bonds. If they do not accept the offer, Greece has threatened to pay them nothing.

The European Union and International Monetary Fund have made a successful bond swap a pre-condition for final approval of the €130 billion bailout agreed last month.

Amid signs that acceptances had picked up strongly on Wednesday, a string of international banks and insurers, ranging from Germany’s Munich Re to Bank of Cyprus declared they would back the deal.

Investors have until Thursday night to sign up to the deal.

GERMANY PAYS ULTRA LOW RATE

Meanwhile, Germany has paid the lowest rate in its history to borrow for five years, as investors continued to flock to the safety of Europe’s top economy despite easing market tensions.

Germany paid an average rate of 0.79 per cent at an auction of five-year bonds, or Bobls, on Wednesday, said its central bank, which organised the sale.

Demand was solid, with investors bidding for €5.9 billion worth of bonds with only €4.0 billion being sold.

By comparison, the yield on new Italian five-year debt last week stood at 4.19 per cent.

Newedge Strategy analyst Annalisa Piazza said “market dealers are clearly interested in safe-haven paper as nervousness about the final outcome of the Greek (debt writedown deal) has clearly prevailed in the past few sessions.”

Germany is one of only four eurozone countries - the others being Finland, Luxembourg and the Netherlands - that continue to enjoy a top triple-A rating from S&P after recent downgrades.

But Germany’s safe-haven status was called into question in November when an auction of 10-year debt attracted minimal demand, sending markets into tailspin.

At that time, Germany received bids for only €3.9 billion worth of Bunds, despite offering €6.0 billion.

Since then, Germany has enjoyed strong demand for debt of all maturities, with the yield even turning negative on some short-term paper, meaning investors effectively paying Germany for the privilege of lending it money.

HUNGARY FAILS TO CONVINCE EU OF COMMITMENT

In Brussels, the European Commission told Hungary on Wednesday it must do more to show it is committed to central bank independence despite Budapest’s softer stance, potentially further delaying new talks on an aid deal needed to keep the country solvent.

The EU launched legal action against Hungary in January over legislation that Brussels says conflicts with EU law and hurts the independence of the central bank, the judiciary and the data protection authority.

Prime Minister Viktor Orban has backed down in his standoff with Brussels and the EU’s top economic official Olli Rehn said in a statement he saw a willingness by Hungary to meet the demands of the European Union’s executive Commission.

But while the Commission will take no further legal action on the central bank impasse, it was still cautious and said it would move forward with legal proceedings on data protection and the retirement age of judges.

“I welcome that Hungary is ready to correct its central bank legislation. However, we need clear commitments,” said Rehn, the EU’s Economic and Monetary Affairs Commissioner.

Orban needs an International Monetary Fund deal to rebuild investor confidence in his unorthodox economic policies, after two years of measures that included Europe’s biggest bank tax and a renationalisation of private pension fund assets.

Budapest is also being pressed by the Commission to cut its deficit - or face losing access to €495 million in EU funds.

The Commission declined to comment on recent statements by senior Hungarian officials that talks could soon start on a precautionary standby loan from the Washington-based lender.

Asked if talks were any closer, Commission spokeswoman Pia Ahrenkilde-Hansen echoed Rehn, saying: “We do need clarification of the commitments that Hungary has already made regarding the independence of the central bank.”

For things to move forward, the Commission said both it and the European Central Bank needed to see the draft legislation that Hungary is proposing, as well as confirming its plans to stop issuing official press releases criticising monetary policy decisions of the Hungarian central bank.

The Commission said it wanted more assurances that the central bank governor’s wages would no longer be used “as a tool to exercise pressure and a breach of independence of the central bank”.